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It has been more than five years since the global financial crisis caught us unprepared in 2008. What lessons have we learned? Looking back, nobody will miss the fact that the world has undergone some tremendous changes. In fact, 2008 proved to be a turning point both for China and the world as a whole.

First and foremost, the "Washington Consensus", with its roots in neo-liberalism that had dominated the global economic landscape since its inception in 1990, met its demise that year.

In the two decades before the crisis, the Washington Consensus, with its core policy of "privatisation, liberalisation and marketisation", was aggressively pursued by Western countries and the key institutions of the International Monetary Fund and World Bank.

It was viewed as "economic panacea" and force-fed to developing countries in Latin America, Africa, Eastern Europe and Southeast Asia so that they could access the rescue funds available from the IMF and the World Bank. As a result, these countries suffered economic disasters that pushed them into the malaise of the middle-income trap.

Under the disguise of financial innovation, huge amounts of capital were dispersed all over the world, producing asset bubbles and disconnection from the real economy and leading to a derivative-laden financial market that eventually had a total meltdown in 2008.

The fact is the balance of power between advanced nations and developing countries has been tipping in favour of the latter in the last five years. This certainly has intricate geopolitical and geo-economic implications all over the world.

To name a few: China and other emerging economies have now become new engines of global economic growth and recovery, contributing more than 50 per cent to world economic growth in the last five years. And the replacement of the US-dominated G7/G8 by a more balanced G20 as the primary platform for global economic governance is another sobering example. That took place at the G20 summit in Pittsburgh in 2009.

This clearly demonstrates that developing countries such as China, India, Brazil and South Africa are entering the inner circle of international economic decision-making and, furthermore, that Western countries can no longer claim to have total control of world economic affairs.

Global governance reform - as indicated by moves to redistribute the voting shares in the International Monetary Fund and World Bank - will contribute to the development of an international economic order that is more just and fair.

However, we should watch out for some negative developments in global governance. Advanced nations led by the US are seemingly abandoning multilateralism in favour of "alliance-of-the-willing" type of free trade arrangements such as the Trans-Pacific Partnership and Transatlantic Trade and Investment Partnership that exclude China and other major developing nations. Such regional efforts are by themselves not negative, but when they involve geo-strategic considerations, they definitely change "the rules of game" and become more complicated.

The financial crisis and its aftermath have brought forth the urgency in reforming the existing global governance structure. If not for the collective timely action by G20 right after the crisis, the world economy would have crashed. It is therefore right to wonder whether an economic system built on the heels of the end of second world war is still relevant.

The clarion call for a new system has been sounded already, and action is called for.

The world economy is now in bad shape with advanced nations experiencing high debt, high unemployment and really slow growth, anticipating years of "Japanese stagnation and deflation".

Another danger comes from the repeated quantitative easing applied abundantly by the US, the European Union and Japan that has resulted in asset bubbles everywhere with emerging countries being the most vulnerable victims.

The balance sheet of the US Federal Reserve has increased from US$900 billion before the crisis to the present figure topping US$4 trillion. The average debt-to-GDP ratio for advanced nations is currently 126 per cent. In this high debt and the flooding of liquidity the world over are buried the seeds for a possible repeat of the financial crisis we witnessed in 2008.

Last but not the least, the financial and economic crises have fragmented the social fabric of many countries, including those in the West. Protests such as the Occupy Wall Street movement and the Arab Spring as well as large-scale riots have become daily occurrences. Short-term election cycles have hijacked the administrations of many a Western nation with ensuing social crisis one after another.

It is estimated by the International Labour Organisation that by 2015 the total global unemployment will reach 208 million, with a quarter in the euro zone. No doubt governments are worried.

Yet, the crisis has not undermined the global economic order fundamentally. The US is still the most dynamic and innovative economy and US dollar the major international reserve currency.

There is a long way to go before a more just and equitable global economic order and governance structure emerge.

China has chosen the developmental path of socialism with Chinese characteristics. The past several decades have proven beyond any doubt that China is heading in the right direction.

China's development and advance is intertwined closely with that of the rest of the world. The further growth of China not only benefits its people, but also the whole world.

He Yafei is deputy director of the Overseas Chinese Affairs Office of the State Council

This article appeared in the South China Morning Post print edition as: